This refinance calculator compares your current mortgage with a new one. It shows the change in your monthly payment, how long it takes for the savings to cover closing costs, and the difference in total interest.
The break-even point
Break-even = closing costs ÷ monthly savings
If you expect to keep the home longer than the break-even time, refinancing to a lower rate usually pays off. If you might sell sooner, it may not.
Worked example
You owe $300,000 at 7% with 27 years left, paying about $2,063.44 a month. Refinancing to 6% over 30 years cuts the payment to about $1,798.65, saving $264.79 a month. With $6,000 in closing costs, you break even in about 1 year 11 months.
Frequently asked questions
Why might lifetime interest go up even with a lower rate?
Starting a new 30-year term stretches the remaining debt over more years. Choosing a term close to what you have left, or paying extra, avoids this.
Should closing costs be rolled into the loan?
Rolling them in avoids paying cash up front, but you pay interest on them for the life of the loan.